Politics through the Lens of Economics

Lecture 5: Who Becomes a Politician?

Masayuki Kudamatsu

1 November, 2017

Any change

in policy of your choice?

Don't think on your own

Ask me during my office hour

 

Ask other students / friends / other professors

 

Google in Japanese and in English

For your term paper...

Discussion Time

Does the Citizen Candidate Model explain

why gun control hasn't been adopted

in the U.S.?

Background for discussion #1

131 mass shootings in the U.S. since 1966

Image source: Washington Post (2017)

Worksplace

Church

School

Military

Shop

Other

Background for discussion #1 (cont.)

131 mass shootings in the U.S. since 1966

Image source: Washington Post (2017)

Background for discussion #2

Discussion Time

Does the Citizen Candidate Model explain

why gun control hasn't been adopted

in the U.S.?

Aim to give a wrong answer!

Today's Road Map

Who becomes a politician?

A theory of political parties

Motivation for today #1

Main lessons from

citizen-candidate model

Median voter's ideal policy

is not necessarily adopted

Policy choice depends on

which citizens run for office

Evidence suggests

Politicians choose their own ideal policy, not the median voter's

We need to know who becomes a politician

to understand policy-making

Who becomes a politician?

Two dimensions to consider

Representation

Competence

Occupation

Income

Family background

Education

IQ test score

Leadership

Media sometimes report politicians' previous occupation

Naitonal legislators' previous job

across major rich countries

But these statistics are not meaningful

unless it's compared to the entire population

That's a difficult data exercise

except for one country...

Politician's job is a crude measure of representation/competence

Their father's job/income: more relevant as "social class"

Competence should be measured by IQ test etc.

Evidence from Sweden

Data: about 50,000 municipal councillors during 1982-2010

Botkyrka municipal council meeting

(Many national politicians used to be municipal councillors)

If politician's father is perfectly representative of the population

Share

1%

Income percentile

0

100

Evidence on representation from Sweden

Obtain income distribution for every adult Swede in 1979

Then see where each politician's father is located in the distribution

Swedish Politicians DO represent the entire population

in terms of father's income

Figure 4 of Dal Bo et al. (2016) "Who Becomes a Politician?"

While Swedish doctors or CEOs DO NOT

Figure 5 of Dal Bo et al. (2016) "Who Becomes a Politician?"

Figure 7 of Dal Bo et al. (Feb. 2016) "Who Becomes a Politician?"

Swedish politicians DO represent the entire population

in terms of father's occupation 

(farmers overrepresented, though)

Measure competence by:

Cognitive skills (i.e. IQ test score)

Leadership

"Residual ability"

= Income difference that cannot be explained by 

   age, education, occupation, and location

Evidence on competence from Sweden

Swedish politicians are

more competent

than the population

with similar parental income

Figure 12 of Dal Bo et al. (Feb. 2016) "Who Becomes a Politician?"

Swedish politicians are

more competent

than the population

with similar parental jobs

Figure 13 of Dal Bo et al. (Feb. 2016) "Who Becomes a Politician?"

We do not know whether the same is true for other countries

due to the lack of data

When competent citizens become politicians?

Step 1: Each citizen decides whether to run for office

Running for office is costly

Step 2: Each citizen decides whom to vote

Candidate wins by plurarity

Step 3: Winning candidate picks a policy to implement

When competent citizens become politicians?

Modify a citizen-candidate model so that

Citizens differ in competence, not in their ideal policy

Competent citizens 

earn higher wages in private sector

prefer a better policy

When competent citizens become politicians?

Step 3: Winning candidate picks a policy to implement

Competent citizens pick a better policy

Step 2: Each citizen decides whom to vote

They vote for competent citizens, if they run for office

Optimization at each step

Optimization at Step 1: whether to run for office

Competent

Incompetent

Benefit from running for office

Competent candidate:

more likely to win

When competent citizens become politicians?

Competent

Incompetent

Cost of running for office

Foregone

earning

difference

Optimization at Step 1: whether to run for office

When competent citizens become politicians?

Competent

Incompetent

Net benefit from running for office

Loss

Gain

Optimization at Step 1: whether to run for office

When competent citizens become politicians?

Competent

Incompetent

Loss

Gain

Run for office

Keep working

in private sector

Optimization at Step 1: whether to run for office

When competent citizens become politicians?

Only incompetent citizens run for office

Competent

Incompetent

Loss

Gain

Optimization at Step 1: whether to run for office

When competent citizens become politicians?

If being a politician is more rewarding...

Competent

Incompetent

Competent citizens also run for office

and more likely to win in election

Gain

When competent citizens become politicians?

If being a politician is more rewarding...

Competent

Incompetent

Gain

When competent citizens become politicians?

Competent citizens are elected politicians

Being a politician is more rewarding when...

Politicians are well-paid (relative to private sector wage)

When competent citizens become politicians?

Being a politician is more rewarding when...

Politicians are prestigious

Source: The Harris Poll

% of respondents saying the occupation is prestigious

(US, in 2015)

Doctor 90%
Scientist 89%
Firefighter 80%
Banker 44%
Politician 40%
Video game designer 37%
Real estate agent 32%

When competent citizens become politicians?

most politicians

are

competent

So we have multiple equilibria

Politicians

are

prestigious

Competent

citizens

enter into politics

most politicians

are

incompetent

Politicians

are not

prestigious

Competent

citizens

stay away from politics

When competent citizens become politicians?

Evidence from Italian mayors

Mayor's salary jumps

from 2,169 euro to 2,789 euro (per month)

across the municipal population of 5,000 in Italy

We can use regression discontinuity design

to see whether a politician's pay rise induces

competent citizens to enter into politics

Evidence from Italian mayors

A pay rise induces

more educated citizens to run 

Candidates

Winners (i.e. Mayors)

And they win

Who becomes a politician in autocracy

Fact #1: Politicians are less educated than in democracy

Democracy

Autocracy

Who becomes a politician in autocracy

Fact #1: Politicians are less educated than in democracy

Figures 3 and 4 of Besley and Reynal-Querol (2011)

Who becomes a politician in autocracy

Both good performance and social connections

are key to become a top politician in China

Figure 1 of Jia et al. (2015)

Fact #2:

Who becomes a politician in autocracy

Cabinet ministers in Africa 

represent the population distribution of ethnicity

Fact #3:

Cameroon

Who becomes a politician in autocracy

Cabinet ministers in Africa 

represent the population distribution of ethnicity

Fact #3:

Sierra Leone

Today's Road Map

Who becomes a politician?

A theory of political parties

Motivation for today #2

In citizen-candidate model

Voters do not believe

any other electoral promise

than candidate's ideal

What should politicians do if their ideal policy is not popular?

Form a political party

Citizen-candidate model:

a politician can commit to his/her own ideal policy only

policy

politician A

Political parties as a commitment device

Consider two politicians with different ideal policies

policy

politician A

politician B

Political parties as a commitment device

If these two politicians form a political party

the party can commit to any policy in between

policy

politician A

politician B

Political parties as a commitment device

To understand why, consider a policy not in between 

policy

politician A

politician B

Political parties as a commitment device

To understand why, consider a policy not in between 

policy

politician A

politician B

Both politicians are better off by moving this policy to the left

The party AB cannot commit to this policy

Political parties as a commitment device

policy

politician A

politician B

Same is true for any policy not in between

The party AB cannot commit to any policy not in between

Political parties as a commitment device

policy

politician A

politician B

Now consider a policy in between

Moving this policy towards A's ideal policy

B is worse off and thus never agrees to A

Political parties as a commitment device

policy

politician A

politician B

Now consider a policy in between

Moving this policy towards B's ideal policy

A is worse off and thus never agrees to B

Political parties as a commitment device

policy

politician A

politician B

Now consider a policy in between

Suppose 

Suppose 

neither A nor B can win an election himself/herself

but this policy allows the party AB to win an election

Political parties as a commitment device

policy

politician A

politician B

Now consider a policy in between

Then

Both A and B are willing to promise this policy

The party AB can commit to this policy

And any deviation is vetoed by one of them

Political parties as a commitment device

policy

politician A

politician B

Same is true for any policy in between

The party AB can commit to any of these policies

Political parties as a commitment device

A role of political parties in policy-making

Consider two policy issues (e.g. redistribution & whom to subsidise)

Redistribution

Group-specific

subsidy

Consider three groups of citizens where no group has a majority

Redistribution

Group-specific

subsidy

Rich

Poor

Special

Interest

A role of political parties in policy-making

Redistribution

Group-specific

subsidy

Rich

Poor

Special

Interest

Without political party

Poor will run for office and win in equilibrium

A role of political parties in policy-making

(by the same logic as here)

Redistribution

Group-specific

subsidy

Rich

Poor

Special

Interest

What if Rich and Special Interest form a political party?

A role of political parties in policy-making

Rich

Special

Interest

The party cannot commit to any policy not on the line in between

Both better off by moving to a policy on the line

A role of political parties in policy-making

Redistribution

Group-specific

subsidy

Rich

Poor

Special

Interest

Both Rich and Special Interest prefer these policies to Poor's ideal

A role of political parties in policy-making

Redistribution

Group-specific

subsidy

Rich

Poor

Special

Interest

The party obtains the majority of votes by offering these policies

A role of political parties in policy-making

This theory of political party may explain the rise of BJP in India

India: world's biggest democracy ever since its independence in 1947

Congress Party had been dominant

BJP won general elections in late 1990s

It's a coalition of the wealthy and

(poor) Hindu fundamentalists

Summary

Swedish politicians are

Representative of the whole population in terms of social class

More competent than the average Swede

Competence citizens become politicians

if being a politician compensates for their income loss

One role of political parties: 

Allow politicians to commit to policies other than their ideal

These insights wouldn't have been obtained

if we hadn't had the citizen-candidate model

Next lecture

Model of politics #3

Probabilistic Voting Model

Voters care about more than one policy issues

Can be used to analyze pork-barrel politics

This lecture is based on the following academic articles:

Dal Bó, Ernesto, et al. 2016. "Who Becomes a Politician?" Unpublished paper.

Caselli, Francesco, and Massimo Morelli. 2004. “Bad Politicians.” Journal of Public Economics 88: 759–82.

Gagliarducci, Stefano, and Tommaso Nannicini. 2013. “Do Better Paid Politicians Perform Better? Disentangling Incentives from Selection.” Journal of the European Economic Association 11(2): 369–98.

Levy, Gilat. 2004. “A Model of Political Parties.” Journal of Economic Theory 115(2): 250–77.

Politics through the Lens of Economics: Lecture 5 Who Becomes a Politician?

By Masayuki Kudamatsu

Politics through the Lens of Economics: Lecture 5 Who Becomes a Politician?

  • 1,858